National Insurance Employment Allowance

5th November 2013

As you may be aware from the Chancellor’s 2013 Budget that from 6 April 2014 businesses of any size will be entitled to a £2,000 employment incentive under the new National Insurance Employment Allowance.  The annual £2,000 will be claimed as part of the normal payroll process.

The allowance is only available against employer’s Class 1 secondary NICs, currently charged at 13.8% on most pay, and not on employees NIC liabilities.

This allowance removes the “jobs tax” on millions of small businesses, and is likely to encourage one-man businesses to take on their first employee.  It means that employers will be able to hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax.

The NIC giveaway will be worth around £1.75bn to employers, almost a third of whom will no longer pay any Employers NI.

Hopefully it will provide a welcome spur to real employment Mr Osborne added: “For the person who’s set up their own business, and is thinking about taking on their first employee – a huge barrier will be removed.”